One of the most common questions financial experts get asked by investors is, “Why is gold so expensive?” Gold has been coming down from its all-time high of $1900 in 2011 but has been gradually increasing since the beginning of this year following its low point of $1050 in December 2015. Gold prices have steadily increased over the past few months, leading many to wonder whether this is the right time to buy. Here are three reasons many experts cite as justification for why gold remains a wise long-term investment, even at its current price:
The Many Uses for Gold
Gold is a globally valuable, precious metal for which there are numerous uses – one of which is as an investment. Investors can not only buy and sell gold bullion, but also invest via a Gold IRA (individual retirement account). E-gold is yet another option for investors to consider. Gold bullion comes in two forms — bars and coins.
Other uses for gold include jewelry-making, dentistry, medicine, electronics, and even aerospace. Gold isn’t just nice to look at — there are numerous practical applications for this precious metal. This universal appeal means that your gold will always have intrinsic value, regardless of what the market is doing. Gold offers investors the kind of security that can’t be found with paper currency.
Falling Currency Values
Currency values have an effect on the price of gold. Because the value of some paper currencies have been plummeting fast in recent decades, it makes gold appear more expensive than it really is, when in reality the value has remained constant and it simply takes more dollars to purchase the same amount. At one time, the United States and many of the world’s currencies were on a gold-standard system, a solution that eliminated the problem of currency inflation altogether by tying paper money to physical precious metals. Today, no world currencies use this method, and the results have sent fiat currencies around the globe on a long-term downward plummet in value. Many believe that a return to the gold-standard would be a positive change for the U.S. economy, but as with all major issues, there are detractors as well.
While the U.S. and the rest of the world uses fiat currency systems, investors will continue turning to gold as a hedge against inflation and a wealth preservation technique. A fiat currency system is one that is, in the simplest terms, based on nothing. If these systems fail, gold will continue to retain its value when paper currency does not. Many of the world’s financial markets are clamoring to buy gold, and the demand shows no sign of slowing.
The Higher Gold Prices Go, The More Investors Make
Gold is an investment with a history of gaining in value, leading most investors to believe that gold prices will increase in the future – so the sooner you purchase gold, the sooner you’ll reap the rewards. And the higher prices climb, the more money investors will make. Keep in mind; Gold is considered to be a long term investment and it should be planned to buy and hold for many years. When price surges occur, as they historically have time and again, those already invested in the yellow metal see huge benefits, and those who waited to pull the trigger see their ability the value of their cash holdings decline. Which side do you want to be on?
Don’t Wait Any Longer to Profit
Don’t be left holding paper currency that devalues over time; instead, invest in gold and watch the value of your investments rise. There are plenty of ways to diversify your gold investments — including gold bullion or retirement options such as a Gold IRA.
Although the information in this commentary has been obtained from sources believed to be reliable, American Bullion does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice. American Bullion will not be liable for any errors or omissions in this information nor for the availability of this information. All content provided on this blog is for informational purposes only and should not be used to make buy or sell decisions for any type of precious metals.